Tax,advantages,homebased,busin DIY Tax advantages of a homebased business
Normal 0 false false false MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable{mso-style-name:"Table Normal";mso-tstyle-rowband-size:0;mso-tstyle-colband-size:0;mso-style-noshow:yes;mso-style-parent:"";mso-padding-alt:0in When starting a new work at home business it is very easy to become consumed by it. We spend so much time trying to get the business up and running that we may end up becoming burned out and lose our motivation. There is so much to learn and
The first thing is that you need to know there is a totally different set of laws, regulations and tax law that governs proprietorships and corporations. And for the small business entrepreneur the tax advantages offered during the first 5 years are enormous. After 5 years you are expected to begin showing a profit but this is not necessarily written in stone. Lets take a closer look at some of the advantages of a proprietorship. If I were to show you how a one-time $439 USD investment could gain you from $1000 to $2500 in tax refunds and write offs per year would you be interested in learning more? Okay, here goes.If you are a blue or white collar worker, a doctor, lawyer or other professional, can you write off on your taxes the gas and other travel and parking expenses you accumulate driving to and from work? Your lunch expenses? Your home office? Travel and vacations? Any part of your household utilities expenses?The answer is NO - you cannot write these expenses off your income tax.If you start a business, a proprietorship, working out of your home, call it "your name consulting" or whatever seems to fit best, you are now able to write off all of the following:Automobile mileageGasolineOther car maintenance% of automobile depreciation*Home office (as a % of your home)% of home utilities expenses& of your home telephone billEntertainment expensesVacation expensesMeals*100% of a Leased CarAnd more, these are just the bigger ones.There are, of course, conditions. You cannot go on vacation and simply write off all of your vacation expenses. You must share the information about your product or service with others while you are on vacation --- more than just passing out business cards --- and you must also keep records of every contact you make. This will also help you with follow-ups. These contacts, with whom you are sharing the details of your business service or product, are the contacts that will validate your write off. You should have at least two a day while on vacation. Who? The barber, your golfing partners, beautician, people you meet in the store or casually just about anywhere? All you have to do is talk to people, share your information and you have succeeded. You will be surprised, also, by how many will want to join you? But you must keep records of these contacts.The same goes for your gasoline, insurance, depreciation and repairs and maintenance write-offs. You must keep accurate records of mileage. Your start mileage, destination(s), people contacted or business conducted, and finish mileage. Then, at the end of the year, you need to compute what percentage of your automobile use (based upon business and total mileage) was business. That is the percentage of total automobile expenses you are able to write off.For the telephone you have a different situation altogether. You must get a business line. This can be accomplished one of two ways. Either by a cell phone or by a second phone line installed. There are several arguments for both but the most telling one is the convenience of the cell phone. With a separate business phone you are able to write off the entire expense. But with the cell phone you must keep track of all personal calls. The advantage of the cell phone is that you have it with you and can advise your clients that you are on the way, running late because, etc. And keep in touch with your home base while you are out and pick up any messages which may have been left at your home number.This applies, also, to your home. You are allowed to write off all home expenses in the amount that your business office at home is a percentage of your total home space. So if your home is 2000 sq. ft., and your office is 200 sq. ft., you may write off 10 percent of your total household expenses. This includes rent or mortgage payment and all utilities.If you keep your meticulous records, take your working vacation every year and do your business all the time, you stand to save from $1000 to $2500 on your income taxes every year, for at least the first 5 years.If you can start your business for under $1000, and keep your business going for under $1000 a year, you are in a plus situation where your business is actually making you a profit --- even though it is technically a loss --- every year for at least the first five years.
Copyright 2004 by Windy Dawn Marketing and Windy Windblad. This article may be freely copied and used on other web sites only if it is copied complete with all links and text intact and unchanged except for minor improvements such as misspellings and typos.
Tax,advantages,homebased,busin